Correlation Between Exel Composites and KONE Oyj

Can any of the company-specific risk be diversified away by investing in both Exel Composites and KONE Oyj at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Exel Composites and KONE Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exel Composites Oyj and KONE Oyj, you can compare the effects of market volatilities on Exel Composites and KONE Oyj and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Exel Composites with a short position of KONE Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exel Composites and KONE Oyj.

Diversification Opportunities for Exel Composites and KONE Oyj

0.88

Correlation Coefficient

Exel Composites  KONE Oyj

Very poor diversification

The 3 months correlation between Exel and KONE is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Exel Composites Oyj and KONE Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KONE Oyj and Exel Composites is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Exel Composites Oyj are associated (or correlated) with KONE Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KONE Oyj has no effect on the direction of Exel Composites i.e., Exel Composites and KONE Oyj go up and down completely randomly.

Pair Corralation between Exel Composites and KONE Oyj

Assuming the 90 days trading horizon Exel Composites Oyj is expected to generate 2.39 times more return on investment than KONE Oyj. However, Exel Composites is 2.39 times more volatile than KONE Oyj. It trades about 0.23 of its potential returns per unit of risk. KONE Oyj is currently generating about 0.19 per unit of risk. If you would invest  28.00  in Exel Composites Oyj on December 27, 2024 and sell it today you would earn a total of  13.00  from holding Exel Composites Oyj or generate 46.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Exel Composites Oyj  vs.  KONE Oyj

Exel Composites Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exel Composites Oyj are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Exel Composites demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KONE Oyj

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KONE Oyj are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, KONE Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exel Composites and KONE Oyj

The main advantage of trading using opposite Exel Composites and KONE Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exel Composites position performs unexpectedly, KONE Oyj can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KONE Oyj will offset losses from the drop in KONE Oyj's long position.

The idea behind Exel Composites Oyj and KONE Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.